Goods and Services is a system of indirect taxation in India which has merged most of the indirect taxes into a single system of taxation. It was introduced by the Constitution (One hundred and first amendment) Act, 2016.
Features of GST:
- It is one indirect tax for the whole nation which has made India one unified market.
- GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer.
- GST has been introduced in the country after thirteen years since it was first introduced in the report of the Kelkar task force of the indirect taxes.
GST stands for Goods and Services Tax levied by the government in an attempt to replace all of the indirect taxes. The main idea behind introducing GST was to improve the economy of the nation. It was implemented with the belief that a single undivided Indian market would strengthen the economy and make the nation powerful.
The previous indirect tax system in India was complicated because there were various types of taxes that were charged by the Central and the State Governments on Goods and Services. These taxes included Entertainment Tax for watching films, Value Added Tax (VAT) for purchasing goods and services by the consumer. Other taxes included Excise Duties, Import Duties, Luxury Tax, Central Sales Tax, Entry Tax and Service Tax.
These are the taxes subsumed at the Central level:
- Central Excise Duty
- Additional Excise Duty
- Service Tax
- Additional Custom Duty
- Special Additional Duty
These are the taxes subsumed the State level:
- State Value Added Tax/Sales Tax
- Entertainment Tax
- Luxury Tax
- Purchase Tax
- Entry Tax
To reduce the burden of tax on common man of the country, the Government of India came up with the idea of Goods and Services Tax in the budget session of 2008. After various discussions about the provisions of the proposed law in the Lok Sabha, the final amendment (122nd) bill was passed in the Rajya Sabha.
GST is broadly classified into two categories – Central GST and State GST. There are four different slabs for The Goods and Services Tax, ranging from 5% to 28%.
Advantages of GST Bill:
- The tax structure has been made simple and transparent.
- It has simplified the seamless movement of goods across states and reduced the transportation costs of businesses.
- Lower tax burden has translated into lower prices of goods for consumers.
There are 160 countries in the world where GST has been implemented. Some of the popular countries being Australia, Canada, Germany, Japan, to name a few. India, being the latest to join the list, needs to get accustomed to it. Many businesses in India are still trying to understand the application of GST. Here is a website that makes GST calculation in India simple.
I hope you found this post useful and informative. If you have any queries or suggestions related to this post, please drop your comments in the comment section below. I would be glad to help you out. To show your support, share this post with your friends on Social media and elsewhere.
Thank you very much for reading!